SELL ON USOIL As usual here is our trade for today on CRUDEOIL/CL/USOIL, you can enter by setting the same SL and TP as mine!
Follow for more!
Let me know the market you want an entry on!
Oilfutures
SELL USOILYou can sell CRUDEOIL / USOIL / CL at the same levels I placed on the chart.
Follow for more daily trades!
TP REACHED ON USOILAs you can see on the chart, CL reached our TP in which it reversed its direction to start going higher.
Follow for more daily trades!
SELL USOILBeen a while since I last posted a trade, I'm sharing with you this on CL1! / USOIL that you can take as seller with the same TP and SL on the chart.
Follow for more!
WTI CRUDE OIL & BRENT OIL Weekly Outlook: Wait For SELL Setup!This weekly forecast is for Oct 21 - 25th.
US & UK Oil have been up and down throughout this Mid East crises. WIth a strong bearish candle and close last week, the indications are that the market has taken a bearish turn.
I will be watching the market closely for a pullback to the newly formed Daily -FVG for a high
probability short setup.
Take caution, day traders. As there will be buys to take as price retraces up, but I would urge you to remain patient and wait for the HP sells.
Check the comments section below for updates regarding this analysis throughout the week.
Enjoy!
May profits be upon you.
Leave any questions or comments in the comment section.
I appreciate any feedback from my viewers!
Like and/or subscribe if you want more accurate analysis.
Thank you so much!
Disclaimer:
I do not provide personal investment advice and I am not a qualified licensed investment advisor.
All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies.
I will not and cannot be held liable for any actions you take as a result of anything you read here.
Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this channel, expressed or implied herein, are committed at your own risk, financial or otherwise.
Light Crude Oil Futures: Bulls vs. Bears – Big Moves ComingAlright, trading fam, let me set the scene. We’re sitting at $69.40 right now, and the market is coiling like a wave that’s either going to barrel or wipe out everyone trying to ride it. This is one of those setups that makes you lean in because, whichever way it goes, it’s going to be a ride. You ready?
Bearish Path – Things Could Get Real Slippery
If the price slips below $62.30, it could open up a steep drop to as low as $17.12. Yeah, that’s a long way down. It’s like paddling into the wrong break and realizing there’s no way out without eating sand. If the bears manage to break that key support, all bets are off. Think demand drops, rising inventories, or a stronger dollar that sends oil spiraling lower. Traders who’ve been short are already eyeing this level—if it breaks, they’ll be riding that wave all the way down.
Bullish Path – Eyes on the Double Top
But here’s the flip side: if the bulls show up and break through $89.10, we’re talking about a potential double top formation. And if that double top gives way? It’s all gas, no brakes, with $129.25 in sight. It’ll take some momentum to push through—maybe supply cuts or geopolitical tensions—but if the bulls catch that wave, it could be a smooth ride to higher levels.
What’s the Move?
Right now, it’s all about staying patient and reading the flow. If $62.30 holds, you know the bulls still have some fight in them. But if they lose that level, the bears are going to have a field day. On the other hand, if the bulls break through $89.10, it’s game on to higher highs. This is one of those trades where the chart is giving us clear levels, and now it’s just a matter of who takes the wheel.
If this breakdown gave you some clarity, follow, share, and pass it along to anyone else riding these markets. Let’s keep an eye on these levels and catch the right wave when it comes.
Mindbloome Trader
SELL USOIL/CRUDEOILOur entru today on Crude Oil is a short one, you can sell with TP and SL as set on the chart.
For more questions, don't hesitate to ask!
Follow for more.
WEEKLY FOREX FORECAST SEPT 7-11th: US WTI CRUDE OILUS WTI Crude Oil expanded to the upside last week, with a convincing close. ON the Daily, a +FVG was formed. Things are in place for price to continue to move higher.
My bias is bullish, and I am looking for buys.
Consider the tension in the Mid East, pushing prices higher.
Check the comments section below for updates regarding this analysis throughout the week.
Enjoy!
May profits be upon you.
Leave any questions or comments in the comment section.
I appreciate any feedback from my viewers!
Like and/or subscribe if you want more accurate analysis.
Thank you so much!
Disclaimer:
I do not provide personal investment advice and I am not a qualified licensed investment advisor.
All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies.
I will not and cannot be held liable for any actions you take as a result of anything you read here.
Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this channel, expressed or implied herein, are committed at your own risk, financial or otherwise.
LIGHT CRUDE OIL 1W COMODITIES - CRUDE is still DOWNLIGHT CRUDE OIL 1W COMODITIES - CRUDE is still DOWN
It is difficult to understand the current context of raw materials in relation to their behaviour in previous times, and above all what is happening with oil.
Until very recently, a conflict in the Middle East meant increases in the price per barrel. At the moment, the hornet's nest is stirred up, but it does not seem to be enough. The Israeli conflict with its close neighbours would have been more than enough for this scenario of increases, and even more so when a nuclear power like Iran is directly mentioned.
However, the crude oil market is in a downward spiral that has not yet hit bottom. Whether it is due to the threat of electric cars, the use of renewable energies or any other reason that occurs to us why the oil market is currently bearish.
Regardless of the factors that have brought the price to $70 per barrel, we can consider oil (black gold) as an alternative to gold or other reserve assets.
If the technology market turns around, everyone will run around like headless chickens and this could be a good safe haven.
As for the strategy to follow based on Technical Analysis, our position remains bearish until the price finds a support zone:
SUPPORT 1: 57 - 61
SUPPORT 2: 34 - 39
As long as it does not break the bearish channel, we will follow the evolution of the price until it gives buy signals and we will pay special attention to the areas marked as supports.
Once our strategy is defined, it is a matter of waiting to enter at the right time.
TradeX Bot, you can configure BUY and SELL strategies on futures, so our way of approaching the market will offer us opportunities whether the market goes up or down.
TradeX BoT (in development): Tool to automate trading strategies designed in TradingView. It works with both indicators and graphic design tools: parallel channels, trend lines, supports, resistances... It allows you to easily establish SL (%), TP (%), SL Trailing... multiple strategies in different values, simultaneous BUY-SELL orders, conditional orders.
This tool is in the development process and the BETA will soon be ready for testing.
FOLLOW ME and I will keep you informed of the progress we make.
I share with you my technical analysis assessments on certain values that I follow as part of the strategies I design for my portfolio, but I do not recommend anyone to operate based on these indications. Inform yourself, train yourself and build your own strategies when investing. I only hope that my comments help you on your own path :)
USOIL - Short Trade Idea (26th Sept 2024)This is my analysis on USOIL.
So, what my eye catches is the ascending sellside trendline liquidity being build up. We have a recent touch on it, retracing into a weekly SIBI. Based on this, I am anticipating us trade quickly down into a monthly BISI as my initial target.
The stoploss I set is based on the current swing high. A wider stoploss could be adopted to weather any sort of wick damage happening during high impact news.
Let's see how this plays out.
- R2F
A New President's Potential Impact on Oil Prices1. Introduction
The U.S. presidential election in 2024 is set to bring new leadership, with a new president guaranteed to take office. As history has shown, political transitions often have a profound effect on financial markets, and crude oil is no exception. Traders, investors and hedgers are now asking the critical question: how will WTI Crude Oil futures react to this change in leadership?
While there is much speculation about how a Democrat versus a Republican might shape oil policy, data-driven insights provide a more concrete outlook. Using a machine learning model based on key U.S. economic indicators, we’ve identified potential movements in crude oil prices, spanning short, medium, and long-term timeframes.
2. Key Machine Learning Predictions for Crude Oil Prices
Short-Term (1 Week to 1 Month):
Based on the machine learning model, the immediate market reaction within the first week following the election is expected to be minimal, with predicted price changes below 2% for both a Republican and Democratic win. The one-month outlook also suggests additional opportunity.
Medium-Term (1 Quarter to 1 Year):
The model shows a significant divergence in crude oil prices over the medium term, with a potential sharp upward movement one year after the election. Regardless of which party claims the presidency, WTI crude oil prices could potentially rise by over 40%. This is in line with historical trends where significant price shifts occurred one year post-election, driven by economic recovery, fiscal policies, and broader market sentiment.
Long-Term (4 Years):
Over the course of the full four-year presidential term, the model predicts more moderate growth, averaging around 15%. The data suggests that, while short-term market movements may seem reactive, the long-term outlook is more balanced and less influenced by the winning party. Instead, economic conditions, such as interest rates and industrial activity, will have a more sustained impact on crude oil prices.
3. Feature Importance: The Drivers Behind Crude Oil Price Movements
The machine learning model's analysis highlights that crude oil price movements, especially one year after the election, are primarily driven by economic indicators, rather than the political party in power. Below are the top features influencing crude oil prices:
Top Economic Indicators Influencing Crude Oil:
Fed Funds Rate: The most significant driver of crude oil prices, as interest rate policies affect everything from borrowing costs to overall economic growth. Changes in the Fed Funds Rate can signal shifts in economic activity that directly impact oil demand apart from the US Dollar itself.
Labor Force Participation Rate: A critical indicator of economic health, a higher participation rate suggests a stronger labor market, which supports increased industrial activity and energy consumption, including crude oil.
Producer Price Index (PPI): The PPI reflects inflation at the producer level, impacting the cost of goods and services, including oil-related industries.
Consumer Sentiment Index: A measure of the general public's outlook on the economy, which indirectly influences energy demand as consumer confidence affects spending patterns.
Unit Labor Costs: An increase in labor costs can signal inflationary pressures, which could lead to changes in oil prices as businesses pass on higher costs to consumers.
This study exclusively uses U.S. economic data, excluding oil-related fundamentals such as OPEC+ supply and demand information, in order to focus on the election’s direct impact through domestic economic channels.
Minimal Influence of Political Party on Price Movements:
Interestingly, the machine learning model suggests that the political party of the newly elected president has a relatively low impact on crude oil prices. The performance of WTI crude oil appears to be more closely tied to macroeconomic factors, such as employment data and inflation, than the specific party in power.
These findings emphasize the importance of focusing on economic fundamentals when analyzing crude oil price movements for longer term exposures, rather than solely relying on political outcomes.
4. Historical Analysis of Crude Oil Price Reactions to U.S. Elections
Looking back over the last two decades, the performance of crude oil post-election has varied, depending on global conditions and the economic policies of the newly elected president.
Notable Historical Movements:
George W. Bush (Republican): In his 2000 election, crude oil dropped nearly 50% within a year, reflecting the broader economic fallout from the bursting of the dot-com bubble and the events of 9/11. In contrast, his 2004 re-election saw oil prices climb 21.5% within a year, driven by the Iraq War and increasing global demand for energy.
Barack Obama (Democratic): After his 2008 election, crude oil prices surged by 33.8% within one year, partly due to economic recovery efforts following the global financial crisis. His 2012 re-election saw more modest growth, with an 8.3% rise over the same period.
Donald Trump (Republican): His election in 2016 coincided with a moderate 23.8% increase in crude oil prices over one year, as the U.S. ramped up energy production through fracking, contributing to global supply increases.
Joe Biden (Democratic): Most recently, crude oil prices skyrocketed by over 100% in the year following Biden’s 2020 victory, driven by post-pandemic economic recovery and supply chain disruptions that affected global energy markets.
5. WTI Crude Oil Contracts: CL and MCL Explained
When trading crude oil futures, the two most popular contracts offered by the CME Group are WTI Crude Oil Futures (CL) and Micro WTI Crude Oil Futures (MCL). Both contracts offer traders a way to speculate or hedge on the price movements of crude oil, but they differ in size, margin requirements, and ideal use cases.
WTI Crude Oil Futures (CL):
Price Fluctuations: The contract moves in increments of $0.01 per barrel, meaning a $10 change for one contract.
Margin Requirements: As of recent estimates, the margin requirement for trading a CL contract is around $6,000, though this can fluctuate depending on market volatility.
Micro WTI Crude Oil Futures (MCL):
Price Fluctuations: 10 times less. The contract moves in increments of $0.01 per barrel, meaning a $1 change for one contract.
Margin Requirements: 10 times less, around $600 per contract.
Practical Application:
During periods of heightened market volatility—such as the lead-up to and aftermath of a U.S. presidential election—traders can use both CL and MCL contracts to navigate expected price fluctuations. Larger traders might use CL to hedge against or capitalize on significant price movements, while retail traders may prefer MCL for smaller, controlled exposure.
6. Conclusion
As the 2024 U.S. presidential election approaches, crude oil traders are watching closely for market signals. While political outcomes can cause short-term volatility, the machine learning model’s predictions emphasize that broader economic factors will drive crude oil prices more significantly over the medium and long term.
Whether a Democrat or Republican wins, crude oil prices are expected to see a potential increase, particularly one year after the election. This surge, driven by factors such as interest rates, labor market health, and inflation, suggests that traders should focus on these economic indicators rather than placing too much weight on which party claims the presidency.
7. Risk Management Reminder
Navigating market volatility, especially during a presidential election period, requires careful risk management. Crude oil traders, whether trading standard WTI Crude Oil futures (CL) or Micro WTI Crude Oil futures (MCL), should be mindful of the following strategies to mitigate potential risks:
Use of Stop-Loss Orders:
Setting predefined exit points, traders can avoid significant drawdowns if the market moves against their position.
Leverage and Margin Control:
Overexposure can lead to margin calls and forced liquidation of positions in volatile markets.
Position Sizing:
Adjusting position sizes according to risk tolerance is vital especially during uncertain periods like elections.
Hedging Strategies:
Traders might consider hedging their crude oil positions with other instruments, such as options or spreads, to protect against unexpected market moves.
Monitoring Economic Indicators:
Keeping a close watch on key U.S. economic data can provide valuable clues to future crude oil futures price movements.
By using these risk management tools effectively, traders can better navigate the expected volatility surrounding the 2024 U.S. election and protect themselves from significant market swings.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
OILUSD/H4 WTI oil fluctuates in the stable range of $70 - $80.OILUSD forecast on August 13, 2024:
WTI oil is under pressure from the war and DXY is decreasing. Currently, the oil price has risen from the $71 region back to the $80 area. It is likely that oil will experience a correction before continuing its upward trend. The trading trend today is BUY.
Key levels to watch are: 76.5, 78, 80, and 82.
Recommended orders:
Plan 1: BUY OILUSD zone 76-76.5
SL 75.5
TP 78 - 80 - 81.
Plan 2: BUY OILUSD zone 77.60 - 78.10
SL 77.20
TP 79 - 80 - 81.
Plan 3: SELL OILUSD zone 83.30 - 83.50
SL 83.80
TP 82 - 81 - 78.
Crude OilPair : Crude Oil
Description :
Bullish Channel as an Corrective Pattern in Short Time Frame and Breakout of Upper Trend Line
Break of Structure
RSI - Divergence
Completed " 12345 " Impulsive Waves and " AB " Corrective Waves
Support Level
Crude OilPair : Crude Oil
Description :
Completed " 12345 " Impulsive Waves
Break of Structure
Demand Zone
Rising Wedge as an Corrective Pattern in Short Time Fame
Fibonacci Level - 61.80%
75: Decline in Oil Tankers to China Signals Weaker DemandThe number of oil tankers heading to China has dropped to its lowest in nearly two years, indicating weaker demand in the world's second-largest economy. Bloomberg reports only 86 supertankers en route over the next three months, the lowest since August 2022.
Current Scenario: After holding $70 on the weekly chart, oil prices are attempting to reach new highs around $90. This movement suggests bullish momentum as the market reacts to shifting demand dynamics.
Bearish Scenario: If oil prices fail to maintain momentum and drop below the recent low, we could see a trend reversal. Key support to watch is around $60, where buyers might step in again.
Bullish Scenario: If oil prices break above $90, we could target $100 as the next major resistance level. Sustained bullish momentum would be necessary for this upward move, potentially driven by improving economic indicators or geopolitical factors.
Turbo Tuesday's So we are heavily bullish and in this scenario I like to see a retracement around NY that will enable me to start looking for my entry model that will Target the BSL that is marked.
Pretty simple today...
I have a 1hr fvg that I would like to be respected meaning 1hr candle closes above the discount of the FVG.
If before NY we take out the BSL marked I will update here..
USO is in a sweet spot on its chart LONGUSO while the middle east, the Houthi rebels and the Suez Canal shipping quagmire affect
oil liquidity globally and prices at the pump continue to be volatile the federal government
seeks contracts to restore the national strategic reserves depleted in the last supply demand
challenge while the presidential and congressional election cycle starts warming up.
On the weekly chart, USO has just crossed over the long term anchored mean VWAP line
as well as the POC line of the volume profile. This is a bullish momentum move. Price is
situated in the middle of the high volume area showing expectations of decent trading volume
and liquidity. I see this as an opportunity to take long trades in oil or anything oil related.
CVX is on sale after a drop after the morning open. i will look at oilfield services stocks, big
oil and oil futures.
USO / UCO a play on barrel oil shock LONGUCO is shown here as a one month trend - It is sitting on the rising support tendline about
2% below the recent high. Oil prices contribute to inflation. Anyone in the USA is aware of
gasoline prices at the pump. Geopolitics plays into price. At present, US Navy warships are
consuming refined oil and heading to the Middle East. Iran and Russia are sanctioned and must
sell oil on the global market ( primarily India and China ) at artificially low prices. If Iran
retaliates against Isreal, its oil infrastructure will be bombed back into the Stone Age in less
than a day or two by the US. Global oil prices will spike nearly instantly from spot oil to
futures. US Domestic producers will benefit ; the insane net cash flow to them will
dramatically increase quickly. Russia will sell more oil to make up for Iran being taken off
supply but will not capitalize so much given the sanctions. The price of oil will likely go
north of $100 USD / barrel and potentially higher. Iran could go nuclear and any residual
oil infrastructure would be turned into a quagmire of scrap metal in another day of work for
the US Navy bombers and the fighter jets that escort them into strategic missions.
Defense contractor stocks will spike as well. This could be a black swan event.
My trading dictates that I add to my positions and average in until price goes against my idea.
I am increasing my positions in gold and silver along with ETFs inversing the indices banks
and financial stocks until the dust is settled. This includes any plays on VIX. I will also look
at individual domestic oil stocks as well as junior precious metal miners.
Options Blueprint Series: Pre and Post OPEC+ WTI Options PlaysIntroduction
The world of crude oil trading is significantly influenced by the decisions made by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. These meetings, which often dictate production levels, can lead to substantial market volatility. Traders and investors closely monitor these events, not only for their immediate impact on oil prices but also for the broader economic implications.
In this article, we explore two sophisticated options strategies designed to capitalize on the volatility surrounding OPEC+ meetings, specifically focusing on WTI Crude Oil Futures Options. We will delve into the double calendar spread, a strategy to exploit the expected rise in implied volatility (IV) before the meeting, and the transition to a long iron condor, which aims to profit from potential post-meeting volatility adjustments.
Understanding the Market Dynamics
OPEC+ meetings are pivotal events in the global oil market, with decisions that can significantly influence crude oil prices. These meetings typically revolve around discussions on production quotas, which directly affect the supply side of the oil market. The anticipation and outcomes of these meetings create a fertile ground for volatility, especially in the days leading up to and immediately following the announcements.
Implied Volatility (IV) Dynamics
Pre-Meeting Volatility: In the days leading up to an OPEC+ meeting, implied volatility (IV) often rises. This increase is driven by market uncertainty and the potential for significant price moves based on the meeting's outcome. Traders buy options to hedge against or speculate on the potential price movements, thereby increasing the demand for options and pushing up IV.
Post-Meeting Volatility: After the meeting, IV can either spike or drop sharply, depending on whether the outcome aligns with market expectations. An unexpected decision can cause a significant IV spike due to the new uncertainty introduced, while a decision in line with expectations can lead to a sharp drop as the uncertainty dissipates.
Strategy 1: Double Calendar Spread
The double calendar spread is a sophisticated options strategy that can potentially take advantage of rising implied volatility (IV) leading up to significant market events, such as the OPEC+ meeting. This strategy involves establishing positions in options with different expiration dates but the same strike price, allowing traders to profit from the increase in IV while managing risk effectively.
Structure
Long Legs: Buy longer-term call and put options.
Short Legs: Sell shorter-term call and put options.
The strategy typically involves setting up two calendar spreads at different strike prices (one higher and one lower), thus the term "double calendar."
Rationale
The rationale behind this strategy is that the longer-term options will experience a greater increase in IV as the event approaches, inflating their premiums more than the shorter-term options. As the short-term options expire, traders can realize a profit from the difference in premiums, assuming IV rises as expected.
Strategy 2: Transition to Long Iron Condor
As the OPEC+ meeting date approaches and the double calendar spread positions reach their peak profitability due to the elevated implied volatility (IV), it becomes strategic to transition into a long iron condor. This shift aims to capitalize on potential volatility changes and capture profits from the expected IV drop.
Structure
Closing the Double Calendar: Close the short-term call and put options from the double calendar spread.
Setting Up the Long Iron Condor: Sell new OTM call and put options with the same expiration date as the long legs of the double calendar spread.
The result is a position where the trader holds long options closer to the money and short options further out, creating a long condor structure.
Rationale
The rationale for transitioning to a long iron condor is to capture profits from a potential decrease in IV after the OPEC+ meeting.
Practical Example
To illustrate the application of the double calendar spread and the transition to a long iron condor, let's walk through a detailed example using hypothetical WTI Crude Oil Futures prices.
Double Calendar Spread Setup
1. Initial Conditions:
Current price of WTI Crude Oil Futures: $77.72 per barrel.
Date: One week before the OPEC+ meeting.
2. Long Legs:
Buy a call option with a strike price of $81, expiring on Jun-7 2024 @ 0.32.
Buy a put option with a strike price of $74, expiring on Jun-7 2024 @ 0.38.
3. Short Legs:
Sell a call option with a strike price of $81, expiring on May-31 2024 @ 0.05.
Sell a put option with a strike price of $74, expiring on May-31 2024 @ 0.09.
Note: We are using the CME Group Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts.
Transition to Long Iron Condor
1. Closing the Double Calendar:
Close the short-term call and put options just before they expire @ 0.01 (assuming they are OTM on Friday May-31, before the market closes for the weekend).
2. Setting Up the Iron Condor:
Sell a call option with a strike price of $82, expiring on Jun-7 2024 @ 0.13.
Sell a put option with a strike price of $73, expiring on Jun-7 2024 @ 0.18.
0.11 and 0.17 are estimated values assuming WTI Crude Oil Futures remains fairly centered around 77.50 and that IV has risen into the OPEC+ meeting weekend.
Transitioning from the Double Calendar to the Long Iron Condor would be done on Friday May-31.
3. Resulting Position:
You now hold a long call at $81, a long put at $74, a short call at $82, and a short put at $73, forming a long iron condor.
The risk of the trade has been reduced by half (assuming the real fills coincide with the estimated values above) from 0.56 to 0.27 = $270 with a potential for reward of up to 0.73 (1 – 0.27) = $730.
This practical example demonstrates how to effectively implement and transition between the double calendar spread and the long iron condor to navigate the volatility surrounding an OPEC+ meeting.
Importance of Risk Management
Effective risk management is crucial when implementing options strategies, particularly around significant market events like the OPEC+ meeting. The volatility and potential for sharp market moves require traders to have robust risk management practices to protect their capital and ensure long-term success.
Avoiding Undefined Risk Exposure
Undefined risk exposure occurs when traders have no clear limit on their potential losses. This can happen with certain options strategies that involve selling naked options. To avoid this, traders should always define their risk by using strategies that have built-in risk limits, such as spreads and condors.
Precise Entries and Exits
Making precise entries and exits is critical in options trading. This involves:
Entering trades at optimal times to maximize potential profits.
Exiting trades at predetermined levels to lock in gains or limit losses.
Adjusting trades based on market conditions and new information.
Additional Risk Management Practices
Diversification: Spread risk across different assets and strategies.
Position Sizing: Allocate only a small percentage of capital to each trade to avoid significant losses from a single position.
Continuous Monitoring: Regularly review and adjust positions as market conditions evolve.
By adhering to these risk management principles, traders can navigate the complexities of the options market and mitigate the risks associated with volatile events like OPEC+ meetings.
Conclusion
Navigating the volatility surrounding significant market events like the OPEC+ meeting requires strategic planning and effective risk management. By implementing the double calendar spread before the meeting, traders can capitalize on the anticipated rise in implied volatility (IV). Transitioning to a long iron condor after the meeting allows traders to benefit from potential post-meeting volatility adjustments or price stabilization.
These strategies, when executed correctly, offer a structured approach to managing market uncertainties and capturing profits from both pre- and post-event volatility. The key lies in precise timing, appropriate strike selection, and diligent risk management practices to protect against adverse market movements.
By understanding and applying these sophisticated options strategies, traders can enhance their ability to navigate the complexities of the crude oil market and leverage the opportunities presented by OPEC+ meetings.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Oil Counter-Trend Longs into Next ShortOil has broken the 15 minute shorts and now are on their way to the All The Way HWB shorts in on the larger 4 hour time frames. You can see how on Friday, the small time frame shorts survived multiple 4 hour candle dives below the 61.8% longs, only to close at or above the 61.8% long. Our 15 minute bias is long and expect it to trade back up to the 82.18-83.42 level, where we sold it in April. Where we can, we will try to be a buyer . . . should have bought those 15 min longs on Friday but it's a hard contract to hold over the weekend. . . .though if there is a direction to hold oil over the weekend, it would be long in the event of a geo-political issue that causes a gap up in oil prices.
Crude Oil Tuesday.Daily Bearish
Stay Bearish bias until 1hr -OB is closed above with a displacement candle @ 83.25
In this chart I am illustrating why IMO, this is a High resistance Liquidity run and not LRLR.
The Price in the circle is Balanced, so for price to cut through this with ease is difficult all be it we have a signature LRLR bellow.
So if a bearish setup appears don't expect it to run through like butter..
I am looking for bearish PA
Crude Oil ForecastSo I was looking at Crude on the weekend and I couldn't determine a clear direction for Monday.
Now Monday Is almost over and we Have disrespected the Mean threshold of the Daily +OB I do expect price to be bearish and heading down towards the Daily FVG.
An Good indicator on the Daily we have respected the WEEKLY ifvg CE.
These things are very important to watch.
Before 0930est I will post intra day targets that I suspect will be Draw On Liquidity.
Bring on Tuesday!
Options Blueprint Series: Credit Spreads for Weekly PlaysIntroduction
Credit spreads are a sophisticated options strategy involving the simultaneous purchase and sale of options of the same class and expiration, but at different strike prices. This approach is particularly effective in scenarios where the trader seeks to capitalize on premium decay while maintaining controlled risk exposure. Commonly used in volatile markets, credit spreads can offer a strategic advantage by allowing traders to position themselves in accordance with their market outlook and risk tolerance.
Understanding Credit Spreads
Selling one option and buying another with the same expiration date but different strike prices is done to earn the premium (credit) received from selling the higher-priced option, offset by the cost of buying the lower-priced option. There are two main types of credit spreads: Call Spreads and Put Spreads, specifically Bull Put Spreads and Bear Call Spreads.
Bull Put Spreads: This strategy involves selling a put option with a higher strike price (receiving a premium) and buying a put option with a lower strike price (paying a premium), both on the same underlying asset and expiration. The trader anticipates that the asset's price will stay above the higher strike price at expiration, allowing them to keep the premium collected. This spread is termed "bull" because it profits from a bullish or upward-moving market.
Bear Call Spreads: Conversely, this strategy involves selling a call option with a lower strike price (receiving a premium) and buying a call option with a higher strike price (paying a premium). The expectation here is that the asset's price will remain below the lower strike price at expiration. This spread is called "bear" because it benefits from a bearish or downward-moving market.
Easy Way to Remember:
Bull Put Spread: Remember it as "selling insurance" on a stock you wouldn't mind owning. You're betting the stock price stays "bullish" or at least doesn't drop significantly.
Bear Call Spread: Think of it as "calling the top" on a stock. You're predicting that the stock won't go any higher, demonstrating a "bearish" outlook.
Risk Profile
The below graph illustrates the risk profile of a Bull Put Spread (Bullish Credit Spread that uses Puts):
WTI Crude Oil Options Contract Specifications
WTI Crude Oil options offer traders the opportunity to manage price risks in the highly volatile crude oil market. Key contract specifications include:
Point Value: Each contract represents 1,000 barrels of crude oil, with each point of movement equivalent to $1,000.
Trading Hours: Options trading is available from Sunday to Friday, providing extensive access to market participants around the globe.
Margin Requirements: Initial margins are set by the exchange and are adjusted according to market volatility. USD 6,281 at the time of this publication (based on the CME Group website).
Credit Spread Margin Calculation: For credit spreads, margins are typically lower as the margin for a credit spread in WTIC Crude Oil options is calculated based on the risk of the position, which is the difference between the strike prices minus the net credit received. This calculation ensures that the trader has sufficient funds to cover the potential maximum loss. (for example: a spread using the 78.5 and the 77.5 strikes which are 1 point away would require USD 1,000 minus the credit received).
Understanding these specifications is crucial for traders looking to employ credit spreads effectively, ensuring compliance with financial requirements and alignment with trading strategies.
Application to WTIC Crude Oil Options
Credit spreads are particularly suited to the Weekly Expiration WTIC Crude Oil Options due to their ability to capitalize on the oil market's frequent price fluctuations. The strategy's effectiveness is enhanced by the oil market's characteristics:
Market Dynamics: Crude oil prices are influenced by a myriad of factors including geopolitical events, supply-demand dynamics, and changes in global economic indicators. These factors can lead to significant price movements, creating opportunities for options traders.
Strategy Suitability: Given the volatile nature of crude oil, credit spreads allow traders to take a directional stance (bullish or bearish) while limiting risk to the difference between the strike prices minus the credit received. This is particularly advantageous in a market where sudden price swings can occur, as it provides a safety buffer in case WTI Crude Oil moves against the trader and then comes to back towards the desired direction.
By employing credit spreads, traders can leverage such market characteristics to potentially enhance returns while maintaining a clear risk management framework.
Forward-looking Trade Idea
For above TradingView price chart presents a trade setup as we consider the current market conditions and employ a put credit spread strategy, focusing on two UFO (UnFilled Orders) Support Price Levels that indicate potential support below the current market price of WTIC Crude Oil Futures. These levels suggest that prices are unlikely to drop below these thresholds anytime soon.
Trade Setup: Utilize the 78.5 and 77.5 put strike prices for the credit spread.
Sell a put option at the 78.5 strike price, where we expect the market will not fall below and collect 0.13 points (USD 130).
Buy a put option at the 77.5 strike price to limit downside risk and define the trade’s maximum loss and pay 0.07 points (USD 70).
Premium Collected: The credit received from this spread is the difference in premiums between the sold and bought puts, which contributes to the overall profitability if the options expire worthless. The net credit collected is USD 60 (130-70).
Expected Outcome: The best scenario is for WTIC Crude Oil prices to stay above the 78.5 strike at expiration, allowing the trader to retain the full premium collected while minimizing risk.
As seen on the above screenshot, we are using the CME Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts.
This trade is predicated on the belief that the underlying crude oil price will remain stable or increase, ensuring that the prices do not fall to the strike price of the sold put, thereby maximizing the potential for profit from the premiums.
Risk Management
Effective risk management is crucial when employing credit spreads in trading. Given the defined risk nature of credit spreads, several strategies can be implemented:
Position Sizing: Adjust the number of spreads to fit within the overall risk tolerance of the trading portfolio, ensuring that potential losses do not exceed pre-determined thresholds.
Stop-Loss Orders: Although credit spreads have a built-in maximum loss, setting stop-loss orders based on market price can help lock in profits or prevent excessive losses in volatile market conditions.
Monitoring: Regular monitoring of market conditions and adjusting positions as necessary can help manage risks associated with unexpected market movements.
Conclusion
Credit spreads offer a strategic advantage for options traders looking to leverage market movements while controlling risk. By focusing on premium collection and employing a disciplined approach to risk management, traders can enhance their chances of success in the volatile WTIC Crude Oil options market.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
